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I'm not completely sure about the etymology of the word, but I do know that in the US, most monopolies were not government granted. They were achieved through a

I'm not completely sure about the etymology of the word, but I do know that in the US, most monopolies were not government granted. They were achieved through aggressive M&A, market manipulation, and other abusive practices (much of which should be seen as a negative externality on the affected human communities). That is exactly why the government was granted significant power to restrain concentrated entities from committing these abuses.

barry-cotter 7y ago
This isn’t true. The only industry I’m aware of that might actually be a natural monopoly, as in the efficient number of companies is one, is aircraft manufacturing. Local utilities aren’t natural monopolies, cable isn’t a natural monopoly, water, gas, electricity, these definitely aren’t natural monopolies. If manufacturing semiconductors, with fabs that cost tens of billions of dollars isn’t a natural monopoly, why do we think anything is? > The Myth ofNatural Monopoly Thomas J. DiLorenzo > It is a myth that natural monopoly theory was developed first by economists, and then used by legislators to "justify" franchise monopolies. The truth is that the monopolies were created decades before the theory was formalized by intervention-minded economists, who then used the theory as an ex post rationale for government intervention. At the time when the first government franchise monopolies were being granted, the large majority of economists understood that large-scale, capital intensive production did not lead to monopoly, but was an absolutely desirable aspect of the competitive process. https://cdn.mises.org/rae9_2_3_3.pdf https://cdn.mises.org/rae9_2_3_3.pdf
- scarface74 7y ago
  Local utilities aren’t natural monopolies, cable isn’t a natural monopoly, water, gas, electricity, these definitely aren’t natural monopolies. How are utilities not a natural monopoly? The cost and disruption of building infrastructure to serve everyone is definitely a monopoly. Do you really want four or five companies digging up streets and building pipes, wires, etc? Also, if you had multiple companies competing, they would only serve the most profitable customers who live in the most dense areas. You see that now with internet providers - especially fiber.
  - pdonis 7y ago
    > How are utilities not a natural monopoly? Water, sewer, and storm drain, yes, that's a plausible natural monopoly. Electrical power, telephone, and internet, no. At most the conduits that the cables have to go through could be a natural monopoly, but not the services themselves. > if you had multiple companies competing, they would only serve the most profitable customers who live in the most dense areas. You see that now with internet providers - especially fiber This could be an argument for individual municipalities building their own infrastructure, owning it, and leasing it to service providers like ISPs. It is not an argument for what we actually have in the US, which is higher-level governments giving monopolies to private companies, and those private companies successfully suing individual municipalities that try to build their own infrastructure, own it, and lease it to service providers.
    - scarface74 7y ago
      So instead of having a private monopoly on infrastructure where politicians tell the private monopoly what to do. Now we have a public monopoly where we have the politicians controlling it directly. There is historical precedent for internet providers competing for internet over a common infrastructure. That use to be required for DSL. None of the companies were profitable. Locally there was MindSpring and Telestream among others that both tried.
  - barry-cotter 7y ago
    Please consider reading the linked article. Utilities are not a natural monopoly because we have multiple examples of competition lasting decades in municipalities. This is not compatible with the economic concept of natural monopoly. It’s a disproof by existence. If you want to discourage too much digging up the street charge people to do it. If they’re doing too much charge more. Problem solved; the various companies that want to dig up will come to a mutually agreeable arrangement on cost sharing if they want to dig up the street. Multiple competing companies going after the most profitable customers is very much not proof of the existence of natural monopoly. It’s also perfectly fine. If you want uneconomic customers served for reasons of equity pay for it. You can either pay for it directly and make the costs visible or you can mandate universal service and spread the costs across all customers. Either way the cost is paid; you don’t get anything for free.
deleted 7y ago
[deleted]
pdonis 7y ago
> in the US, most monopolies were not government granted Railroads: government granted. Public utilities: government granted. Telephone: government granted. Air travel: government granted. Cable TV: goverment granted. ISP: government granted. Seems like a lot.
- arrosenberg 7y ago
  It seems like the common factor enforcing the monopoly is high capital cost as a barrier to entry. That moat allows monopolizing companies to focus their resources on capturing the state to maintain their monopoly status. The remedy would seem to be for more decisive government action - to regulate or nationalize the infrastructure, break up the incumbents as necessary, and create a robust market for services that utilize the infrastructure and pay rents and taxes to the government.
  - kortilla 7y ago
    Or strip the government of its power to enable monopolies in the first place.
    - arrosenberg 7y ago
      We've already seen that show. SPOILER: The government didn't create these monopolies. https://en.wikipedia.org/wiki/Northern_Securities_Company https://en.wikipedia.org/wiki/Northern_Securities_Company https://en.wikipedia.org/wiki/Standard_Oil https://en.wikipedia.org/wiki/Standard_Oil My condolences for your narrative.
      - kortilla 7y ago
        I recommend you read the section from the Standard Oil article on the criticism of the breakup. Also, your rebuke is pretty weak if you have one example compared to the thousands of government granted monopolies all over the US.
    - pdonis 7y ago

barry-cotter 7y ago

This isn’t true. The only industry I’m aware of that might actually be a natural monopoly, as in the efficient number of companies is one, is aircraft manufacturing. Local utilities aren’t natural monopolies, cable isn’t a natural monopoly, water, gas, electricity, these definitely aren’t natural monopolies. If manufacturing semiconductors, with fabs that cost tens of billions of dollars isn’t a natural monopoly, why do we think anything is? > The Myth ofNatural Monopoly Thomas J. DiLorenzo > It is a myth that natural monopoly theory was developed first by economists, and then used by legislators to "justify" franchise monopolies. The truth is that the monopolies were created decades before the theory was formalized by intervention-minded economists, who then used the theory as an ex post rationale for government intervention. At the time when the first government franchise monopolies were being granted, the large majority of economists understood that large-scale, capital intensive production did not lead to monopoly, but was an absolutely desirable aspect of the competitive process. https://cdn.mises.org/rae9_2_3_3.pdf https://cdn.mises.org/rae9_2_3_3.pdf

scarface74 7y ago
Local utilities aren’t natural monopolies, cable isn’t a natural monopoly, water, gas, electricity, these definitely aren’t natural monopolies. How are utilities not a natural monopoly? The cost and disruption of building infrastructure to serve everyone is definitely a monopoly. Do you really want four or five companies digging up streets and building pipes, wires, etc? Also, if you had multiple companies competing, they would only serve the most profitable customers who live in the most dense areas. You see that now with internet providers - especially fiber.
- pdonis 7y ago
  > How are utilities not a natural monopoly? Water, sewer, and storm drain, yes, that's a plausible natural monopoly. Electrical power, telephone, and internet, no. At most the conduits that the cables have to go through could be a natural monopoly, but not the services themselves. > if you had multiple companies competing, they would only serve the most profitable customers who live in the most dense areas. You see that now with internet providers - especially fiber This could be an argument for individual municipalities building their own infrastructure, owning it, and leasing it to service providers like ISPs. It is not an argument for what we actually have in the US, which is higher-level governments giving monopolies to private companies, and those private companies successfully suing individual municipalities that try to build their own infrastructure, own it, and lease it to service providers.
  - scarface74 7y ago
    So instead of having a private monopoly on infrastructure where politicians tell the private monopoly what to do. Now we have a public monopoly where we have the politicians controlling it directly. There is historical precedent for internet providers competing for internet over a common infrastructure. That use to be required for DSL. None of the companies were profitable. Locally there was MindSpring and Telestream among others that both tried.
- barry-cotter 7y ago
  Please consider reading the linked article. Utilities are not a natural monopoly because we have multiple examples of competition lasting decades in municipalities. This is not compatible with the economic concept of natural monopoly. It’s a disproof by existence. If you want to discourage too much digging up the street charge people to do it. If they’re doing too much charge more. Problem solved; the various companies that want to dig up will come to a mutually agreeable arrangement on cost sharing if they want to dig up the street. Multiple competing companies going after the most profitable customers is very much not proof of the existence of natural monopoly. It’s also perfectly fine. If you want uneconomic customers served for reasons of equity pay for it. You can either pay for it directly and make the costs visible or you can mandate universal service and spread the costs across all customers. Either way the cost is paid; you don’t get anything for free.

deleted 7y ago

[deleted]

pdonis 7y ago

> in the US, most monopolies were not government granted Railroads: government granted. Public utilities: government granted. Telephone: government granted. Air travel: government granted. Cable TV: goverment granted. ISP: government granted. Seems like a lot.

arrosenberg 7y ago
It seems like the common factor enforcing the monopoly is high capital cost as a barrier to entry. That moat allows monopolizing companies to focus their resources on capturing the state to maintain their monopoly status. The remedy would seem to be for more decisive government action - to regulate or nationalize the infrastructure, break up the incumbents as necessary, and create a robust market for services that utilize the infrastructure and pay rents and taxes to the government.
- kortilla 7y ago
  Or strip the government of its power to enable monopolies in the first place.
  - arrosenberg 7y ago
    We've already seen that show. SPOILER: The government didn't create these monopolies. https://en.wikipedia.org/wiki/Northern_Securities_Company https://en.wikipedia.org/wiki/Northern_Securities_Company https://en.wikipedia.org/wiki/Standard_Oil https://en.wikipedia.org/wiki/Standard_Oil My condolences for your narrative.
    - kortilla 7y ago
      I recommend you read the section from the Standard Oil article on the criticism of the breakup. Also, your rebuke is pretty weak if you have one example compared to the thousands of government granted monopolies all over the US.
  - pdonis 7y ago